Just Eat is at the centre of a bidding war after investment firm Prosus announced a £4.9 billion bid to buy the food delivery group, months after it agreed a merger with Dutch rival Takeaway.com.
Shares in Just Eat soared after the global tech investor announced the 710p-per-share offer for the UK-based firm.
The board of Just Eat subsequently rejected the hostile approach, saying it “significantly undervalues” the business, and urged shareholders to do the same.
In July, Just Eat announced plans to merge with Takeaway.com in a £9 billion deal.
Prosus said its offer provides a 20% premium to the 594p-per-share offer from the Dutch company.
It said it had approached the directors at Just Eat with a number of proposals but failed to secure an agreement.
Prosus said it had decided to make its bid public to give shareholders an opportunity to consider the offer.
Just Eat said it has corresponded fully with Prosus with the intention of allowing it to “put forward an attractive and compelling valuation” but that its expectations have not yet been met.
The board said the proposed merger with Takeway.com will “provide it with first-mover advantage” in a consolidating sector as well as synergies from the deal.
Just Eat also highlighted that it sees greater potential for “value creation” from the tie-up.
Prosus already has a significant investment portfolio in the food delivery sector, including iFood in Latin America, Swiggy in India, and European business Delivery Hero.
Group chief executive Bob van Dijk said: “We believe our global experience and resources can help Just Eat to achieve its significant potential.
“We believe that Just Eat’s customers and restaurant partners will ultimately benefit from more delivery options, greater restaurant choice, as well as improved service and delivery speeds driven by the combined group’s expertise in product and technology innovation, supported by increased capital investment in the business.
“We presented this idea to the board of Just Eat in good faith, but we have been unable to engage constructively in what we see as a compelling proposition for Just Eat shareholders.
“As an investor and operator with significant experience in this dynamic and competitive sector, both globally and on a local level, we believe we are best placed to support Just Eat through its next phase of essential investment.”
Just Eat said it expects shareholders to vote on the proposed merger with Takeaway.com at the start of December.
Activist investor Cat Rock, which owns a stake in Just Eat, warned Prosus not to interfere with Takeaway.com’s merger offer.
The shareholder, which has previously been a vocal critic of Just Eat’s leadership, argued that the delivery company needs to find a merger partner to succeed in the consolidating market.
Cat Rock said: “The Prosus offer underscores the significant long-term potential and strategic value of Just Eat’s business.
“However, unlike the Takeaway.com offer, the Prosus offer does not allow Just Eat shareholders to participate in any future value creation through the equity of the combined businesses.
“Prosus should share this future value creation with Just Eat shareholders by paying a fair premium.”
On Monday, Just Eat posted rapidly growing sales in the third quarter despite a backdrop of “softer consumer spending”.
Shares in the company jumped 24.1% to 731.6p on Tuesday morning, above the offer price, suggesting that some investors feel a higher bid could still be tabled.